(CNN) — WeWork’s parent company is postponing its plan to go public following a disastrous IPO attempt that resulted in its CEO stepping down.
“We have decided to postpone our IPO to focus on our core business, the fundamentals of which remain strong,” The We Company’s new co-CEOs, Artie Minson and Sebastian Gunningham, said in a statement Monday. “We have every intention to operate WeWork as a public company and look forward to revisiting the public equity markets in the future.”
The coworking-space provider was supposed to be one of the most high-profile Wall Street debuts of the year, with a listing that was originally expected to take place in September. Instead, it became one of the most high-profile IPO debacles in recent memory.
The company faced intense scrutiny for its corporate governance structure — and the control wielded by its co-founder and former CEO Adam Neumann, in particular — as well as for steep losses and a private market valuation that proved far too lofty for Wall Street investors.
In the weeks after it filed to go public, The We Company attempted to defuse investor concerns and outside criticisms by promising to add new board members, announcing an overhaul of its corporate governance structure and having its CEO repay millions for a trademark he had sold to the company.
Those moves still appeared not to be enough to win over investors. There were reports that the company’s IPO valuation could fall as low as $10 billion to $15 billion, a fraction of its $47 billion private market valuation.
Last week, the company went a step further: Neumann, long the face of the company, stepped down.
In a statement at the time, Neumann said that “while our business has never been stronger, in recent weeks, the scrutiny directed toward me has become a significant distraction, and I have decided that it is in the best interest of the company to step down as chief executive.”
Wall Street investors might have been “more tolerant” of WeWork’s red flags if its IPO wasn’t coming after a series of lackluster public market debuts this year, Kathleen Smith, principal at Renaissance Capital, which manages IPO-focused exchange-traded funds, previously told CNN Business.
Shares of Uber and Lyft are both hovering around all-time lows, well below their IPO prices, as investors worry about their path to being profitable. Peloton, another closely watched startup, ended its first day of trading Friday 11% below its iPO price.
“WeWork is emblematic of a systemic problem in Silicon Valley. We are seeing a beginning of a correction, a back to sanity moment,” said Megan Bent, managing partner at venture capital firm Harbinger Ventures, which invests primarily in smaller consumer products makers.
While the decision to put off its IPO indefinitely could give WeWork time to improve its core business and corporate governance, it also raises new and more immediate concerns about cash.
The We Company reportedly originally wanted to tap a $6 billion credit line that was contingent on it raising at least $3 billion in an IPO completed before the end of this year. That option now appears to be off the table.
Instead, the cash-burning company may need to turn to other sources of capital — potentially new or existing venture capital investors — while working to trim costs. In recent days, there have been reports that The We Company could put multiple businesses up for sale and sell off a private jet used by the former CEO.
The company lost a staggering $1.9 billion last year, according to its IPO prospectus. During the first half of 2019, it lost $904 million.